Korean shipbuilder buys rival, Europe’s largest

Shares in Europe’s largest shipbuilder, Aker Yards ASA, increased by more than 21 percent to 87.75 crowns on the Oslo stock exchange after South Korea industrial group STX Corp. acquired a controlling stake in Norway’s Aker Yards for an 800 million Euro stake. This move will expand into the more lucrative cruise line business, Norway Post reported.
“The stake purchase was part of an investment in new growth engines for the future,” STX Shipbuilding said. The deal marks the largest overseas acquisition by a South Korean shipyard. STX, South Korea’s fifth-largest shipyard, has been aggressively expanding its businesses by taking over local companies including STX Shipbuilding in 2001 and STX Pan Ocean in 2004.
STX said it would finance the purchase of 32.9 percent stake in the Norwegian shipyard through borrowing and new share offerings by its affiliates. Analysts said the deal would help STX branch out into the cruise liner business as Aker builds cruise ships, ferries and other specialised vessels. STX has enough cash for expansion, analysts said, following a 590 billion Won (453.8 million Euro) domestic public offering of its affiliate STX Pan Ocean last month.
The acquisition of the Norwegian company is expected to help STX expand into the European market amid increased competition with Chinese rivals. Local shipbuilders such as Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering are venturing into more value-added businesses such as building cruise liners as Chinese yards rapidly expand capacity to overtake South Korea as the world’s biggest shipbuilding nation.
“Aker Yards is an accomplished and recognised leader in the shipbuilding business, and our strategic stake in the company represents a solid opportunity to gain valuable exposure to attractive industry segments,” STX Chairman Duk-Soo Kang said in a statement. Aker, with annual sales of about 4.8 billion Euro, has 18 yards in eight countries including France and Germany. It reported bigger than expected losses from its core operations in the second quarter, due to rising cost at its shipyard in Finland. Aker specialises in building sophisticated ships for the offshore oil industry, merchant shipping and cruise and ferry services. The South Korean purchase was formally made by Rambera AS, a wholly owned STX subsidiary that is in the process of being renamed STX Norway AS. Another of the group’s subsidiaries, STX Shipbuilding, employs about 6,800 people and has built ships for more than 40 years.